Court Weighs Contract Versus Right to Discrimination Trial

Justices weighed the right of individual workers to file age discrimination suits against the certainty a contract provides employers and unions that the cases will be settled in arbitration.

December 1, 2008

In a case presented Monday, December 1, the Supreme Court considered whether employees can pursue discrimination cases in court even if a collective bargaining agreement mandates that they go to arbitration.

The justices weighed the right of individual workers to file age discrimination suits against the certainty a contract provides employers and unions that the cases will be settled in arbitration, which is considered faster and less costly than court proceedings.

The case revolves around workers employed by Temco Services Industries, a contractor that works in buildings owned by the Pennsylvania Building Co. and 14 Penn Plaza LLC. They were covered by the collective bargaining agreement between the Service Employees International Union and the multi-employer association of the New York City real estate industry.

Several of the Temco workers allege their jobs as night watchmen were taken away and they were reassigned to less desirable positions in August 2003 when Temco contracted with Spartan Security. They said that they were the only people on staff over the age of 50 and filed an age discrimination grievance.

But their union did pursue the wrongful transfer or age discrimination complaints in arbitration. Under the collective bargaining pact, arbitration was mandatory for discrimination claims.

In May 2004, the workers filed discrimination charges with the Equal Employment Opportunity Commission, asserting that their rights had been violated under the Age Discrimination in Employment Act.

A district court ruled that despite explicit language in the union contract calling for arbitration, the employees could not be denied a day in court to fight discrimination. The New York-based 2nd Circuit Court of Appeals concurred.

Justice Ruth Bader Ginsburg expressed concern that the individual right to sue for age discrimination was subjugated to the union-employer agreement.

“This is not a bargainable right,” Ginsburg said.

Paul Salvatore, the attorney representing 14 Penn Plaza, responded that the union contract allowed workers to pursue their case—but they had to do it in arbitration rather than a courtroom.

But David Frederick, the attorney for the workers, argued they could not be restricted to arbitration unless they gave their individual consent.

Justice Stephen Breyer, however, questioned how many different types of cases could fall under a Supreme Court decision upholding the workers’ position. It could range far beyond discrimination and total tens of thousands.

“What’s the principle?” Breyer asked Department of Justice attorney Curtis Gannon, who supported the employees’ position. “What is the line here that we’re drawing with this case?”

Earlier, Frederick said that he didn’t foresee a burgeoning number of suits. “I don’t think ruling in the workers’ favor in this case opens any kind of Pandora’s box at all,” he said.

Chief Justice John Roberts Jr. and Justice Anthony Kennedy both wondered how companies would fare if workers could pursue redress in the court system in defiance of a contractual mandate for arbitration.

Under that circumstance, companies might require individual workers to sign agreements to limit their discrimination claims to arbitration.

“I just don’t think the employer is going to get much under this interpretation, and that will hurt employees,” Kennedy said.